2 Navy employees, 3 contractors get prison time

A federal judge gave two former civilian Navy employees and three North County defense contractors prison sentences ranging from 18 months to more than three years for their roles in a years-long bribery and fraud scheme at North Island Naval Air Station.

U.S. District Court Judge Larry A. Burns also sentenced two other former Navy workers to probation that included spending 30 consecutive weekends at the downtown federal jail.

The sentences came in a case in which prosecutors said more than $1 million in gifts — including cash, gift cards for Home Depot, Lowe’s and the Apple store, and home remodeling work — was given to the Navy employees over at least a six-year period. And the case is far from over.

The owners of two of the defense contractors involved in the scheme have also been indicted on bribery, money laundering and fraud charges.

The case is also widening. On Oct. 3, federal prosecutors charged a fifth Navy worker, Kenneth Ramos, with conspiracy to commit bribery and bribery of a public official. Court records said from 2007 to 2011 he received more than $10,000 in cash, jewelry and electronics from one of the defense contracts, keeping some for himself and distributing some gifts to others at the base.

The most severe sentence Burns handed down on Tuesday was for Donald Vangundy, 54, of Chula Vista, who received 41 months in prison. Prosecutors say he took $413,000 in gifts from defense contractors over the years, pressuring them to provide the goods in order to keep doing business with the Navy.

Vangundy’s lawyer told Burns his client was one part of a larger culture that pressures workers to perform task the military needs, and lean on contractors to get the job done. Lawyer Gerald Blank told the judge “the government’s claim this all started with Mr. Vangundy is just plain wrong.”

Blank said Vangundy accepted responsibility for his actions, but indicated contractors giving gifts to workers is nothing new.

“This has been going on that island for a long time,” he said.

Burns did not disagree, but said it was not a reason to escape punishment.

“This was a long-running abuse of the public trust,” he said.

Kiet Luc, 53, an assistant to Vangundy, got a 30-month prison sentence. He received $559,700 in gifts — including $240,000 in gift cards.

Two supervisors, Brian Delaney, 55 of La Mesa, and David Lindsay, 57, of San Diego, were sentenced to three years’ probation each. Burns said they were not involved in the scheme for as long as the others, though he faulted them for knowing what was going on and not acting to stop it.

Delaney received $50,000 in materials and labor to remodel his home. Lindsay also got $20,000 in home remodeling work and $23,000 in cash.

All four of the workers have resigned, retired or were fired from their jobs after details about the investigation emerged in early 2011. They all worked on an aircraft repair program at the Fleet Readiness Center at North Island Naval Air Station in Coronado.

Prosecutors said that for years the Navy workers would demand gifts from the defense contractors, who obliged by creating false invoices for items such as reamers and other tools needed to do repair work.

In a brazen touch, the bogus invoices contained a 25 percent markup, which was pocketed by the contractors, prosecutors said.

The Navy workers would create a fake work request form to go along with the false invoices. The paperwork was submitted to the U.S. Department of Defense, which would pay the claims.

That means taxpayers were footing the bills for the gifts. They included $3,500 massage chairs, fancy televisions and other electronics.

Three defense contractors each were given 18 months in prison. They are Michael Craven, 43, of Carlsbad, owner of X & D Supply in Carlsbad; John Newman, 51, of Poway, a sales manager and former owner of Poway defense contractor L&N Industrial Tool & Supply; and Paul Grubiss, 39, now of Wickliffe, Ohio, a former sales manager at Centerline Industrial Inc. in Poway.

One by one, all seven defendants spoke to Burns and each said they were alternately ashamed and embarrassed. But none said there was a compelling reason behind taking the bribes — no family catastrophe or financial mishap. Burns noted they all had good jobs and steady employment. Assistant U.S. Attorney Robert Huie frankly said the motives for taking the gifts were “inscrutable” and that many of the gifts were “luxury toys” like fancy bicycles and kitchen appliances.

“The scheme corrupted people at all levels of the organization, including those people who were supposed to serve as checks in the system,” he said.

In related action, Joanne Loehr and Robert Ehnow were indicted in August on charges of bribery, money laundering and wire fraud. Loehr, 52, of La Jolla was the owner of Centerline, and Ehnow, 46, of Coronado was the owner of L&N. They have pleaded not guilty.